Party City Goes Bankrupt
Famous for being the one-stop-shop for any celebration, Party City announced that it’s closing its doors across the nation. They are offering steep discounts as part of a going-out-of-business sale at most locations, including the Party City here in Shreveport, until Feb. 28. But how did they get here?
Back in January 2023 Party City had filed for Chapter 11 bankruptcy in the Southern District of Texas after suffering from slowing sales and supply problems during the COVID-19 pandemic.
According to the United States Courts, Chapter 11 of the Bankruptcy Code is known as “reorganization” bankruptcy. This allows the debtor to stay in possession of the business, continue operating, and even borrow money with court approval. A plan for reorganization is proposed and approved by the court in order to exit bankruptcy (Chapter 11, n.d.).
By October 2023, Party City had completed their restructuring, and the CEO Brad Weston stepped down in November 2023. The execution of their plan closed 60 underperforming stores, eliminated over $1 billion in debt, and improved the company’s liquidity over the following year. They retained almost 800 locations around the U.S. and believed they had the foundation to move forward with increased profits and long-term growth.
Then, in a news post titled PCHI to Commence Wind Down of Party City Stores and Wholesale Operations, released to their website on December 21, 2024, they announced voluntarily filing for Chapter 11 Bankruptcy in the Southern District of Texas again. The plan this time is to “wind down in the most efficient manner and to maximize value for the benefit of the Company’s stakeholders” (Party City., 2024).
Party City cited “inflationary pressures on costs and consumer spending” alongside consumer habits shifting to be more focused on online shopping among other issues as their primary reasons for filing. They are retaining approximately 95% of their 12,000 employees during the wind down while offering sales to customers (Party City, 2024).
United States Courts. (n.d.). Chapter 11 - Bankruptcy Basics. https://www.uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics.
Party City. (2024, December 21). PCHI to Commence Wind Down of Party City Stores and Wholesale Operations. https://www.partycity.com/pchi-to-commence-wind-down-of-party-city-stores-and-wholesale-operations.html.
